Vale secures deal with Shandong Shipping, China access finally fixed

Dalian: In a big breakthrough for the ongoing impasse between Brazilian miner and China, Shandong Shipping has signed a $500m transport contract with Vale. Four of Vale’s 400,000 dwt VLOCs will be taken on by Shandong Shipping.

The move follows August’s decision by the Ministry of Transport to review its ban on ships larger than 300,000 dwt calling at Chinese ports. The ban, which was issued on safety grounds, was widely seen to have been championed by Chinese shipowners who were worried about the monopoly in freight Vale could have if it ran its 35-strong fleet of VLOCs to China.

Thus far, just two of the VLOCs, which were ordered around five years ago at some $130m each, have called in China – at Dalian and Liangyugang.

Shandong Shipping has a fleet of around 1.4m dwt, set to rise to 2.4m dwt when a series of four 250,000 dwt VLOCs ordered at Qingdao Beihai deliver in the coming three years. These smaller VLOCs, ordered in May, are to go on charter to BHP Biliton.

Speaking at SinoShip’s recent Dry Bulk Business Breakfast in Hong Kong, Mudit Paliwal, ceo of Dubai trading firm Panacore, commented: “Valemaxes not coming to China was more a political decision than anything else. Vale is trying to refinance these ships and offload these ships on operating leases. If you had a big Chinese leasing company taking these ships over that might end the story.” [31/10/13]

RELATED STORY: The latest issue of SinoShip magazine predicted the imminent lifting of the valemax ban and highlighted which ports in China can handle these giant ships. The article is available here.